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Kent Loses Farms And Farmland
The average size of a county farm also shrunk by four acres.
At the same time, the estimated market value of county farmland and the buildings on those properties rose by $159.3 million from 1997 to 2002. The average market value of a farm in the county increased by $181,194, while the average value of an acre went up by $1,224.
All are findings from the 2002 Census of Agriculture released recently by the USDA National Statistics Service.
Despite the fact that the county lost an average of 26 farms and 4,914 acres of farmland each year for that five-year period, total sales for the remaining farms grew by $20.5 million, or $4.1 million each year. Average sales for a county farm rose by $24,331, or $4,866 a year.
But the numbers clearly show that the market value of farm properties rose much faster than product sales did during those five years — 2.5 times faster, by 42 percent to 16 percent — meaning there is more money for farmers in selling their land than in cultivating it.
What drives the difference? Finances, for one thing.
Only 492 county farmers reported a net gain from their operations in 2002, while 718 said they had a net loss for the year. Of those operators who reported increases, the average gain was $91,532. Of those who reported a loss, the average was $8,295.
Half of the county’s farmers reported they had a primary occupation other than farming, and slightly more than 600 said they worked 200 or more days a year at a site other than their farm.
Dennis Pennington, MSU Extension Agriculture Agent for Barry and Kent counties, said it was hard to determine an average rate of return for farmers because they produce so many different products. But he told the Business Journal last week that traditional commodities such as corn, soybeans and wheat, have an average return of about 5 percent.
“A lot of businesses would say a return of 4 percent to 6 percent isn’t enough and ask, ‘Why are you in business?’” he said.
Pennington said farmers who grow higher-value crops, like nurseries and landscaping firms, can get a return that ranges from 8 percent to 12 percent.
In the meantime, property values have risen while the land supply has dwindled. Supply and demand isn’t the only reason for that; another factor is the aging county farmer.
“The average age of the farmer is increasing and as they approach retirement age people want to retire and they don’t want to continue to farm for the rest of their lives,” Pennington said.
“And a lot of times the farms don’t have a next generation that wants to take over the farming operations. So what ends up happening is, the farm gets sold and a lot of times gets sold for other uses.”
Housing developments, rather than commercial or industrial projects, dominate those other uses much of the time.
County Equalization Director David Jager pointed out last year that 94 new residential sub-divisions and site-condos opened across Kent in 2002, meaning 2,139 new lots were registered that year.
“That is nearly two plats a week recorded in Kent County. That is a lot,” Jager said then.
When less land is tied to escalating property values, Pennington said prices rise even more and reach a level that only developers, not other farmers, can afford.
“Somebody else that wants to farm it can’t compete as far as price and be able to make money farming it, compared to the development,” he said.
“The price that you can receive for development is more than what you can afford to invest in land. With getting the small rate of return you get with agriculture, it just doesn’t pencil out.”